December 22, 2004
Keith O`Connell, Esquire
Securities & Exchange Commission
Division of Investment Management
450 Fifth Street, N.W.
Washington, D.C. 20549
Re:T. Rowe Price Capital Appreciation Fund
T. Rowe Price Capital Appreciation Fund-Advisor Class
File Nos.: 033-05646/811-4519
Post-Effective Amendment No.: 21
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price Capital Opportunity Fund-Advisor Class
T. Rowe Price Capital Opportunity Fund-R Class
File Nos.: 033-56015/811-07225
Post-Effective Amendment No.: 11
T. Rowe Price Real Estate Fund, Inc.
T. Rowe Price Real Estate Fund-Advisor Class
File Nos.: 333-36137/811-08371
Post-Effective Amendment No.: 10
T. Rowe Price Short-Term Bond Fund, Inc.
T. Rowe price Short-Term Bond Fund-Advisor Clas s
File Nos.: 002-87568/811-3894
Post-Effective Amendment No.: 32
Dear Mr. O`Connell:
Below are our responses to the remaining two comments that we did not address in our December 17, 2004 correspondence to you.
Comment #3:
In the last paragraph under the subheading, "Transactions not subject to redemption fees", you state that some transactions are not motivated by short-term trading consid erations and, therefore, may be exempt from the redemption fee policy subject to prior written approval by designated persons at T. Rowe Price. Please clarify. Timing would be defined as buying and selling on a particular date or during a period of time. The rule states that you have to describe with specificity any exceptions (exemptions), and if there are any arrangements including timing, you must disclose the persons allowed to do it and when.
Response:
Items 1, 2, 4, and 9 under the subheading, "Transactions not subject to redemption fees", have been revised. Additionally, we have added items 10 through 14 and the last
paragraph under this subheading has been removed. All revisions and additions are listed below:
1. Shares redeemed via an automated systematic withdrawal plan;
2. Shares redeemed through or used to establish an automated, nondiscretionary
rebalancing or asset allocation program, if approved in writing by T. Rowe Price;
4. Shares purchased with retirement plan participant and employer contributions at
the direction of a retirement plan participant or his or her beneficiary (e.g., payroll
contributions);
9.Shares redeemed by a fund (e.g. for failure to meet account minimums or to cover
various fees such as fiduciary fees).
10.Shares purchased by rollover, transfer, and changes of account registration within
the same fund;
11. Shares redeemed to return an excess contribution in an IRA account;
12. Shares purchased by a fund-of-funds product, if approved in writing by
T. Rowe Price;
13.Shares transferred to T. Rowe Price or a third party intermediary as a
service provider when the aged shares are systematically indeterminable;
14.Shares redeemed in retirement plans or other products that restrict trading to no
more frequently than quarterly, if approved in writing by T. Rowe Price.
Comment #8:
The sixth paragraph under the subheading, "Excessive Trading and Market Timing" states some transactions are not motivated by short-term trading considerations and, therefore, may be exempt from the excessive trading policy subject to prior written approval by designated persons at T. Rowe Price. When there are exceptions, you must describe these with specificity.
Response:
This paragraph has been revised as follows:
"In addition, transactions in automated, nondiscretionary rebalancing, asset allocation programs, or fund-of-funds products may be exempt from the excessive trading policy subject to prior written approval by designated persons at T. Rowe Price."
Very truly yours,
/s/Tawanda Cottman
Tawanda Cottman
In connection with responding to your comments, T. Rowe Price acknowledges that:
the fund is responsible for the adequacy and accuracy of the disclosure in the filings;
staff comments or changes to disclosure in response to staff comments in the filings reviewed by the staff do not foreclose the Commission from taking any action with respect to the filing; and
the fund may not assert staff comments as a defense in any proceedings initiated by the Commission or any person under the federal securities laws of the United States.
/s/Henry H. Hopkins
_______________________________
Henry H. Hopkins
Vice President,
T. Rowe Price Capital Appreciation Fund
T. Rowe Price Capital Opportunity Fund, Inc.
T. Rowe Price Real Estate Fund, Inc.
T. Rowe Price Short-Term Bond Fund, Inc.
